A revised version of the Practical Guide to Policy Making in Northern Ireland has recently been published. This Guide seeks to provide a starting point to help those working in policy development or those carrying out policy evaluations identify the issues which they need to take into account to ensure that policy is effective, evidence- based, and specific to the Northern Ireland context. In the light of the new outcomes focused Programme for Government, the Guide emphasises the need for a more integrated approach and encourages people to work with colleagues in other departments and with stakeholders across the wider public sector as well as those in the private and voluntary sectors.

24th August 2016 - Urgent processing of EU projects

DoF issued a new letter to Finance Directors today, FD(DoF)10/16, advising Departments of the need to process INTERREG VA, PEACE IV and other EU structural and investment fund projects urgently; and accordingly that Departments should generally use pro forma documentation rather than preparing detailed business cases, even for the larger cases.

In general, the appropriate business case documentation for such projects should include the application form and business plan prepared by the applicant, the SEUPB’s assessment, and a brief independent assessment by the accountable spending Department.

It is for Departments to decide precisely how much effort to put into their independent assessments but DoF encourages the use of relatively brief pro forma documentation for all cases. An example of a suitable pro forma is attached to the letter. Here is a link to the new letter: FD(DoF)10/16

20th July 2016 - Revised OBC & FBC checklist

Until today, NIGEAE contained a ‘PPP/PFI business case template’ which was designed many years ago as a checklist to summarise the requirements for PPP/PFI outline business cases (OBCs) and full business cases (FBCs). It has been replaced today by a revised checklist summarising requirements for OBCs and FBCs in general.

The revised checklist does not include any significant new guidance; it has been introduced merely to provide a general purpose OBC/FBC checklist rather than one geared to PPP/PFI cases only.

8th July 2016 - Updated business case template for small expenditures

The standard DoF business case template for small expenditures has been updated. Broken links have been fixed and the introduction has been re-worded to say that small expenditures are defined in terms of spending “up to around £1m.” This indicates that the £1m figure is not a rigid upper limit. The form may be adapted to suit projects involving spending that exceeds £1m by a modest amount.

The introduction has also been amended to clarify that the template is designed primarily for appraising mainstream government spending rather than financial assistance to the non-government sectors. Financial assistance cases should be documented according to the guidance issued last year in FD(DFP)07/15.

10th May 2016 – Update of State aid guidance

Section 4.8 of the Appraising Assistance to the Private, Voluntary and Community Sectors page, has now been updated to reflect recent developments in DfE State aid guidance and to stress the importance of considering any State aid implications at the earliest possible stage. Of particular note is the recently published “State aid: A Beginner’s Guide for Public Bodies in Northern Ireland”.

DFP issued a new letter to Finance Directors today, FD(DFP)10/15, reminding Departments of the need for all contracts, including direct award contracts, all contract extensions and all procurement projects to be supported by suitable appraisals and business cases. It advises of the need for suitable and proportionate appraisal of options and completion or update of a business case before signing any contract or taking up any contract extension. It also reinforces the need to engage with DFP’S Central Procurement Directorate (CPD) or other designated Centre of Procurement Excellence (CoPE) from an early stage in all procurements.

Much of this guidance was originally given in FD(DFP)03/12, but it has now been incorporated into the main body of NIGEAE. See the new sub-section 8.10 Business Cases for Contract Awards, Contract Extensions and Procurement Projects. This largely reflects the guidance previously given in FD(DFP)03/12, which is now withdrawn, but it elaborates slightly on proportionate effort and treatment of contract modifications and variations.

DFP has issued FD(DFP)08/15 to Finance Directors to update the guidance on VFM assessment of alternative procurement options. The main purpose is to clarify the treatment of financial costs and benefits, including opportunity costs and residual values.

The letter provides general guidance on assessing alternative procurement options, including details on the consideration of alternative options and treatment of costs, risks and tax. It reiterates that private finance should not be considered for projects involving capital spending of less than £50 million

Sections 5.2 and 5.4 of NIGEAE have been updated to reflect the revised guidance.

18 Sept 2015 - Bytel case: amendments to NIGEAE

NIGEAE has been amended to reflect the Public Accounts Committee’s consideration of the NIAO report titled Cross Border Broadband Initiative: The Bytel Case. The following amendments have been made:

Appraising Assistance to the Private, Voluntary and Community Sectors. Two new paras have been added to the Viability section after 4.5.4 as follows:

Where a project depends on the cooperation of several partners, it is important to ensure that they are all committed to it. The strength of the commitment of all partners, including any relevant third parties, should be fully tested before funding is approved.

One means of helping to ensure commitment is the use of a Memorandum of Understanding (MOU) to record formal agreement between the relevant parties. Departments should consider using a MOU in cases that depend on the cooperation of several parties.

Approval of Departmental Expenditure. A new point 9 has been added at end of para 9.1.2 of the General Principles section as follows:

When re-appraisal is considered necessary in financial assistance cases, it should include re-assessment of the appropriateness of the proposed eligible grants or other financial assistance.

11 August 2015 - Office accommodation leases: supporting guidelines

Emer Morelli (DFP Supply) wrote to Principal Finance Officers on 6th August 2015 about new supporting guidelines for use when assessing office accommodation leases.

She refers to Mike Brennan’s letter to Accounting Officers of 28 July 2015, which advised of the requirement for all departments, business areas, agencies and arm’s length bodies to seek DFP approval regarding the uptake or renewal of leased office accommodation. This letter explained that the Executive’s Asset Management Strategy proposes a range of Property Controls to deliver efficiencies in the provision of office accommodation across the public sector. A key aspect is: ‘all lease expires in respect of administrative office accommodation will be exited and all lease breaks will be exercised subject to a thorough value for money test considering all other accommodation options available within the Government estate – exceptions to be approved by DFP’.

Since then the Reform of Property Management (RPM) team and DFP Supply have been engaging closely with departments. Significant progress has been made to date. To further assist departments in implementing this requirement, supporting guidelines have now been developed. In addition an office accommodation leases business case pro forma has been produced which will assist business areas in the development and completion of the required economic appraisal.

The office accommodation leases supporting guidelines and the office accommodation leases business case pro forma are available together with other relevant resources at the AFMD Office Accommodation Leases page.

DFP has issued a new letter to Finance Directors advising Departments of revised DFP guidance on the appraisal of financial assistance programmes and projects. It is intended to help Departments streamline their procedures and documentation to provide for more flexibility and less effort. The aim is to reduce bureaucracy and speed processes up while continuing to ensure that projects are appraised satisfactorily and accountability requirements are met.

The NIGEAE section on Appraising Assistance to the Private, Voluntary and Community Sectors has been updated to align with the revised guidance in the new letter. See sections 4.1 and 4.2 in particular.

DFP issued DAO(DFP)06/15 on 12th March 2015, setting out the key responsibilities of Accounting Officers regarding the recent Executive agreement on extending shared services further in central government. It asks Accounting Officers to note the requirement for all central government Departments and their NDPBs to work with Enterprise Shared Services (ESS) to consider the extension of shared service coverage.

The letter has implications for business case processes. When considering an "in scope" service change or when an existing "in scope" service contract is due to expire, public bodies must consider, at an early stage and in consultation with ESS, whether the ESS shared service option is a viable alternative. DFP will expect that this option is always appraised in relevant business cases, regardless of whether DFP approval is required or not. Therefore, where there is no evidence of ESS engagement in respect of business cases for "in scope" services, these will be automatically rejected. Similarly, business cases below delegated limits will be scrutinized in this respect as part of routine test drilling.

The complete letter is available at DFP’s Accountability and Financial Management Division website. See DAO(DFP)06/15

18 Dec 2014 - Assessing and documenting sustainable development in business cases for procurement projects

DFP has written to Finance Directors with a reminder that Sustainable Development must be considered at the outset of any procurement process and then throughout the life of the project; and that social clauses (or “community benefit clauses”) must be included in all public procurement contracts.

The letter clarifies how to assess sustainable development in business cases in a proportionate manner and introduces a checklist to be included in all business cases for procurement projects requiring DFP approval at SOC and OBC stages.

Read the full text of the new FD letter by following this link: FD(DFP)11/14

2 Dec 2014 - Infrastructure action plan implementation

The Procurement Board, chaired by the Finance Minister, has developed an Infrastructure Action Plan aimed at improving the delivery of major capital projects taken forward by NI Departments. In this regard, DFP has issued a new DAO letter summarising key relevant guidance and responsibilities. It covers issues including project appraisal and evaluation, delegated limits, use of the centralised Construction Procurement and Delivery Service, use of external advice and responsibilties of Accounting Officers, Departmental Boards, Senior Responsible Owners and Finance Directors.

The letter is available in full at DFP’s Accountability and Financial Management Division website. See DAO(DFP)06/14

DFP has issued a new letter to Finance Directors updating the general guidance on assessing alternative procurement options. It explains that such assessments should focus on financial appraisal from a Northern Ireland perspective. The letter elaborates on several methodological details, including consideration of alternative options and treatment of costs, risks and tax. It confirms that private finance should not be considered for projects involving capital spending of less than £50 million.

The full text of the new letter is available at DFP’s Accountability and Financial Management Division website. See FD(DFP)10/14

The NIGEAE section on PPP and Procurement Issues has been updated to reflect the revised guidance. See NIGEAE section 5.4

5 Aug 2013 -What is value for money?

Value for Money (VFM) is a key factor to consider when planning policies, programmes and projects and when taking any decisions involving the use of public resources.In broad terms, VFM means “getting a good deal from public expenditure". However, it may be considered in different ways from different perspectives and in different contexts.

A note has been added to the NIGEAE Appraisal Resources section, introducing some basic concepts and definitions e.g. brief explanations of VFM from a national or regional perspective, VFM Studies, and the Three E's of VFM; together with various definitions including general VFM definitions and more specific definitions of VFM in procurement. See VFM Concepts and Definitions.

1 Aug 2013 - Proportionate effort - revised guidance

A key principle of appraisal is that proportionate effort should be applied. This means that the resources to be devoted to appraisal should be in proportion to the scale or importance of the objectives and resource consequences in view. Decisions on small expenditures need relatively little appraisal, while those with major spending implications require significant resources to be devoted to appraisal.

A recent review of the business case process in Northern Ireland concluded that one factor which is adding unnecessary length and little value to business cases is the disproportionate amount of information provided in the strategic context section. Further, the type of information being provided has not, in general, been showing the decision-maker whether, and to what extent, the proposed project will contribute to the desired outcomes/priorities of the NI Executive.

The review recommended that NIGEAE Step 1 should be revised to stress that the evidence needs to be presented in a concise manner and demonstrate very sharply how, and to what extent, the proposal contributes to the key priorities and outcomes the Executive intends to deliver. Step 1 has been revised accordingly to emphasise that documentation of the strategic context should be kept very brief and focused. Key relevant policy documents may be listed briefly but resources should not be wasted on long lists and lengthy descriptions of every relevant policy. Anything more than a couple of pages in total will be considered too long.

The NIGEAE guidance on business case documentation has also been revised in an effort to clarify the requirements for smaller expenditures. The key steps of establishing need, considering alternatives, and assessing costs and benefits are generally relevant even for small expenditures, but it is not always necessary to have detailed step by step documentation. There are often well established procedures for recording small scale ‘business as usual’ spending such as travel expenses or routine purchases of office supplies or small items of equipment. Excessive effort on very small expenditures should be avoided. There is no need for a detailed step-by-step appraisal or a lengthy business case document in such cases.

The revisions have been notified to Departments in FD(DFP)11/13. To read the revised guidance in full, see Step 1 under Step by Step Appraisal Guidance and paras 13.5.1 to 13.6.3 under Appraisal and Evaluation of Small Expenditures.

1 Aug 2013 - Social clauses in public procurement contracts

The Programme for Government includes a commitment to “include social clauses in all public procurement contracts for supplies, services and construction.” Arising from this, DFP’s Central Procurement Directorate (CPD) will soon be issuing a new Procurement Guidance Note on Integrating Social Considerations into Contracts. Update: PGN 01/13 was issued on 8 November 2013.

Where social considerations are to be incorporated into procurement, then these should be identified in the business case. NIGEAE explains how social considerations should be addressed in the course of the initial strategic option appraisal. The opportunity to consider social considerations arises at two main stages:

At the earliest stages, when determining the strategic context, the need for the project, and the project objectives i.e. NIGEAE Steps 1 to 3. For example, social needs and objectives may be framed in terms of improving health, transport, education or training.When assessing the costs and benefits of alternative options. Social impacts will be considered at NIGEAE Step 7 when weighing up non-monetary costs and benefits. This will include assessing how the various options perform against the social objectives set at the beginning of the appraisal; and there is also specific provision for screening for sustainability and equal opportunity impact and, where appropriate, conducting sustainability or equality impact assessments.

Having identified the need which the procurement will address, completed the business case and obtained expenditure approval, Departments should work with the appropriate Centre of Procurement Expertise(CoPE) to agree a specification for the procurement. This is the appropriate time to begin considering in detail what social clauses to include in the contract, bearing in mind the PfG commitment to “include social clauses in all public procurement contracts for supplies, services and construction”.

It is important to identify the approach to including social considerations in contracts at the earliest possible stage, to help ensure that the business case and procurement strategy are developed to maximise the benefits delivered by contracts.

A section on Social Clauses in Public Procurement Contracts has been added to Step 7 to refer to the need to give adequate consideration to social considerations in business cases and social clauses in public procurement contracts; and this issue has also been added to the NIGEAE list of Issues Relevant to Appraisal.

Previous developments on economic appraisal guidance can be found in the archived 'what's new?' page.